Constitutional Law of the EU - Essay Example

QUESTION In order to advise Adil with regard to his rights under European Community law (EC), it will be necessary to evaluate individual rights under Directives and state liability for failure to implement EC law at national level. Firstly, the implementation of the European Communities Act 1972 (ECA) expressly incorporated EC law into national law, creating what has been termed the “new legal order1”. Indeed, Lord Denning MR presiding in the case of H.P Bulmer Limited v J Bollinger SA2 asserted that the effect of the ECA was to ensure that “any rights or obligations created by the treaty are to be given legal effect in England without more ado”3. As such, Lord Denning stated that EC law was directly applicable at national level under domestic law. However, the term “directly applicable” has created ambiguity and the principles of direct effect and indirect effect will determine whether the Council Directive relating to pension funds (the Directive) is directly applicable under UK law4. If a provision of EC law is directly applicable, section 2(1) of the ECA asserts that “all such rights, powers, liabilities, obligations and restrictions…… shall be recognised and available in law, and be enforced, allowed and followed accordingly.” The current scenario is concerned with the failure to implement the Directive and this analysis will review whether Adil can enforce the rights he would have had if the Directive had been implemented under the doctrine of direct effect, or alternatively, what his rights are against the state for damage suffered as a result of failure to implement the Directive. The specific nature of directives lies in the type of obligations they impose5. Ultimately Member States have discretion as to how to implement a directive, however they must comply with the positive obligation to implement the directive in the first place6. Problems have arisen as to whether Directives themselves can be invoked by individuals in national courts as giving rise to individual rights7, further compounded by the question as to whether a Member State can be liable for damage resulting from its failure to implement a directive, which is pertinent to Adil’s position. In order to be directly effective, a provision of EC law must constitute a complete legal obligation capable of enforcement as such by a court8. Moreover, in the case of Francovich v Italian Republic9, it was asserted that the pre-requisite for direct effect was that the relevant provision of EC law had to be sufficiently precise and unconditional. Furthermore, in the case of Van Gend En Loos10, it was asserted that “the wording of the…….. [EC Treaty] contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of the States which would make its implementation conditional upon positive measure enacted under national law………which makes it ideally adapted to produce direct effects in the legal relationship between Member states and their subjects.11” However, this initial approach of limiting the applicability of direct effect to negative obligations has subsequently been abandoned and extended to cover a wide range of EC law, in particular Treaty provisions12. With regard to directives however, the controversy as to whether these are directly effective has continued to exercise EC judicial authorities in practice13. In the leading case of Van Duyn14, it had been argued that as directives included obligations of result and not conduct, coupled with the fact that only regulations were expressed to be “directly applicable” under the EC Treaty provisions, they were not capable of judicial enforcement under national law. However, this argument was emphatically rejected and the European Court of Justice (ECJ) asserted that “if …….. By virtue of the provisions of [Article 189], regulations are directly applicable, and consequently, may by their very nature have direct effects; it does not follow from this that other categories of acts mentioned in that article can never have similar effects15”. It has been further commented that while this decision may have signified a subtle foundation for arguing the direct effect of directives, “subsequent developments have rendered this doctrinal shift irreversible16”. Moreover, in the case of Marshall v Southampton and South West Hampshire AHA17 (Marshall II) the Court asserted that the fact that a directive gives a choice to Member States as between alternative methods of attaining a given result does not necessarily mean that the provisions in question are not capable of judicial enforcement under the principle of direct effect. Furthermore, it was also asserted in Marshall II18 that once the state had chosen pecuniary compensation as the means by which it would implement a provision, it was then bound to provide an effective compensatory remedy. As such, it had no discretion in applying the chosen solution and in reaching this conclusion the Court effectively widened the scope of direct effect, combining it with effective remedies19. If we apply the Marshall reasoning by analogy to Adil’s position, it is would appear that the Directive is capable of being directly effective based on the positive obligation on the UK government to set up financial guarantee institutions to guarantee payments to pensioners in the case of employer insolvency or the case of employers who cannot meet their pension commitments to employees. However, the Marshall decision was based on the rationale that whilst the directive in that case had conferred discretion as to the method of implementation, the state had itself chosen to offer pecuniary compensation as its preferred method of implementation. Accordingly, once the state had chosen this method, it was under a positive duty to implement this. With regard to the current scenario however, whilst the Directive itself required member states to implement national guarantee institutions to make guaranteed pension payments in the event of insolvency or inability to meet pension commitments, it nevertheless granted discretion to member states as to how to implement this. If we consider by analogy the Francovich20 decision, the claimants had been made redundant when their employers became insolvent and Italy had failed to implement a Directive which required member states to set up guarantee funds to cover compensation claims of employees made redundant in the event of their employers’ insolvency. The employees claimed that the Italian state was responsible for payment of the compensation either by direct effect of the Directive or on grounds of liability for failure to implement the directive. With regard to the direct effect argument, the ECJ held that the minimum guarantee requirement in the Directive was not sufficiently precise as the Directive did not specify what form the guarantee was to take. As this was ultimately at the discretion of the member states, the ECJ asserted that the Directive was not directly effective. If we consider this in context of Adil’s legal position, it would suggest that it will be extremely difficult for him to succeed in a claim that the Directive had direct effect under UK law based on the fact that member states had discretion as to what form the national institutions and guaranteed payments were to take, further highlighted by the difficulty faced by member states in determining how to implement the Directive in practice. Even if the Directive does have direct effect, the ability of Adil to enforce his rights would depend on the principles of horizontal and vertical direct effect or alternatively indirect effect21. This matter was initially considered in the case of Marshall v Southampton and South West Hampshire AHA (Marshall I)22 which stated that Directives were not horizontally directly effective. This was reiterated in the Duke case23, where it was asserted that directives did not give directly effective rights to individuals which could be relied on horizontally. On this basis, Adil would appear to have no claim against his previous employer under the Directive due to the limitations of horizontal direct effect. Furthermore, although the decision in Foster v British Gas24 extended the definition of “emanation of state” in order to widen the applicability of direct effect it is unlikely to aid Adil in the present situation. Adil works for a company and in line with the judicial rationale in the case of Rolls Royce v Doughty25 is unlikely to come within the definition of “public authority” under the broad interpretation asserted in the Foster case. Moreover, the Directive required the government to fund the pension funds and implement safeguard measures for pensioners and as such, did not impose a public duty on the company that Adil worked for itself in order for the security company to be considered a company carrying out a public function under the reasoning in the Rieser26 case for the purposes of direct effect. Accordingly, as asserted in Marshall I27, Adil will only be able to rely on the rights under the Directive vertically against the state. As the Directive has not been implemented, the questions pertinent to Adil’s legal positions are as follows: 1) Have the time limits for the implementation of the Directive expired? And 2) If so, are the relevant provisions of the Directive directly effective?28 In the case of Publico Ministero v Ratti29, it was asserted that an individual could only bring a claim in respect of failure to implement a Directive if the time limit for implementation had expired. With regard to the current scenario, the deadline for implementation was 31 December 2008 accordingly the first requirement is satisfied. Therefore, the next issue to determine is whether Adil can rely on the provisions of the Directive under the principles of direct effect. As discussed above, due to the nature of the Directive granting discretion to member states as to how to implement its provisions, there is a significant chance that the Directive will fail the sufficiently precise and unconditional test in order to be directly effective. Alternatively, it could be argued that as pensions have been held to constitute “pay30” which is covered by Article 141 of the EC Treaty, Adil’s claim is arguably not dependant on relying on the Directive. As such, his claim could instead be lodged against the State by relying on Article 141 of the EC Treaty itself, which is clear and precise, and as determined in the case of Defrenne v Sabena31, gives rise to direct effects per se. This was further applied to pensions in the case of Worringham v Lloyds Bank Ltd32 in according direct effect to provisions in a Directive that had failed to been implemented under Article 141. Another method utilised to alleviate the consequence of the limitations upon the direct effect of directives is through the principle of construction, which requires national courts (in conformity with their duty under Article 10 of the EC treaty) to give effect to EC law and interpret all national law in light of EC law regardless of direct effect. This is referred to as indirect effect or the “Von Colson” principle. In the Von Colson33case, the ECJ held that although a directive may not be horizontally directly effective, the Member States’ courts should take the provisions of a Directive into account when applying national law, thereby according rights to individuals under EC law by the principle of indirect effect. This was reiterated in the case of Marleasing34 and Kopinghuis35 asserting the positive obligation of the ECJ to interpret national law in accordance with Article 10 of the EC Treaty. Finally, although the Francovich 36decision rejected the claimants’ arguments of direct effect, the ECJ did assert that an individual could bring a claim against the state for damages caused as a direct result of failure to implement a Directive. The rationale behind this decision was that member states had a positive duty to implement EC law and failure to do so constituted a breach of Treaty provisions. This principle was refined by the decision in Factortame v Secretary of State for Transport37, which was applied in the British Telecommunications38 case where it was asserted that in order to bring a claim against the state for damages caused by failure to implement a directive, the directive itself had to expressly confer rights on individuals, the content of which was clear and not open to interpretation. If we apply this to the current scenario, the terms of the Directive clearly confer rights on individuals, with the primary purpose being to protect pensioners against fraud on their pension funds. Moreover, in the case of Dillenkofer,39 it was stated that if the Directive has not been implemented by the prescribed limit, this would be sufficient for a ruling of serious breach of EC law in order to impose state liability. Moreover, in the Francovich40 case, it was determined that damages payable to a claimant must be in respect of all losses incurred directly as a result of the breach. In summary, it is evident that due to the nature of discretion available under the Directive regarding implementation, it will be difficult for Adil to rely on any assertion that he has enforceable rights under the principle of direct effect. In any event, any claim of direct effect would only be applicable against the State as Directives do not have horizontal direct effect. However, an alternative for Adil would be rely on the fact that the rights under the Directive are enforceable by virtue of the direct effect of Article 141 of the EC Treaty as the term “pay” includes pensions. Another alternative would be to rely on the principle of indirect effect on the basis that national courts have a duty to interpret national law in accordance with the Treaty provisions. However, the factual scenario indicates that Adil’s best option would be to pursue a claim against the state for damages caused by its failure to implement the Directive. As such, he would be able to claim full loss and damages directly caused by the failure to implement the Directive. QUESTION 2 (a) With regard to Barry’s situation, Barry want the Accident Tribunal to refer the question to the ECJ by requesting a preliminary ruling and the main point of recourse is Article 234 of the EC Treaty, which is an indirect method of challenging a treaty whereby an individual can go to a national court which there is no judicial redress to and the court upon its own will can decide to refer to the Court of First Instance or the ECJ for a preliminary ruling on the question. I shall evaluate Barry’s rights in context of this Treaty provisions. In contrast to the time limit restrictions with Article 230 applications, there is no such time limit under Article 234, which allows the individual broader scope to bring an action41. Moreover, under Articles 230 and 232 the initial difficulty for Barry is the issue of locus standi requirements of the Treaty. Individuals can only challenge acts which could and should have been addressed to them42. On the other hand, Article 234(1) (b) would potentially enable Barry to make an application43. This enables Regulations to be challenged via the national courts. However, Barry would have to make a challenge in the national courts and is unable to make an Article 234 reference directly as an individual as the ECJ can only hear references made by a recognised court or tribunal of a Member States under Article 234. In the current scenario, Barry wants the Accident Tribunal to make the reference to the ECJ for a preliminary ruling and as established in the case of Broekmeulen v Huisarts44it is evident that an arbitration board can be recognised under Article 234 as a court or tribunal therefore the Accident Tribunal can make a reference. However, its reluctance to do so is Barry’s main stumbling block and as such, he may have to refer the matter to the national courts to rely on Article 234. The inherent problem in this is the discretion afforded to national courts. For example, the French Conseil d’Etat refused to make a reference in the case of Minister of the Interior v Cohn-Bendit45 notwithstanding the fact “that the case clearly warranted such a reference”46. Moreover, in the case of Pigs Marketing Board v Redmond47the ECJ asserted the need to defer to national court discretion as they were in “the best position to appreciate with full knowledge of the matter before it, the relevance of the question of law raised by the dispute and the necessity for a preliminary ruling so as to enable it to give a judgment”48. The leading case of CILFIT 49 clarified the conditions in which national courts are not obliged to make a reference under Article 234; asserting the acte clair principle thus: “the national court or tribunal must be convinced that the matter is equally obvious to the courts of the other Member States and to the Court of Justice. Only if those conditions are satisfied may the national court or tribunal refrain from submitting the question to the Court of Justice and take upon itself the responsibility for resolving it”50. If we apply this to the current scenario, if on the basis of legal advice Barry can establish sufficient grounds to indicate for a preliminary ruling reference under Article 234 and the national court agrees, there are strong grounds for an Article 234 reference to the ECJ. However, the tribunal’s refusal to do so and lack of locus standi would be Barry’s main stumbling block and as such, he may have to refer the matter to the national courts to rely on Article 234. Alternatively, Barry’s other point of recourse would be to bring an action for damages under Article 288(2), which the European Court of Justice (ECJ) has jurisdiction to hear under Article 235. However, as stated in the Schoppenstedt case51, Barry will have to demonstrate that the act or omission on the part of the institutions caused damage to them. Furthermore in cases involving a legislative act, which involves an element of economic policy choice on the part of the Community, a sufficiently serious breach of a superior rule of law for the protection of individuals must be demonstrated52. If Barry could establish a superior rule of law, the next issue is whether the breach is sufficiently serious. The HNL v Council53 case defined this as “manifest and grave”. Moreover, in the KSH Isoglucose case54, a sufficiently serious breach was defined as “verging on the arbitrary”55. It was further asserted in this case that the following factors had to be considered in determining sufficiently serious breach: 1) nature and effect of the breach; 2) extent of loss suffered – was it beyond the normal risks? 3) the damage sustained must be a direct consequence of the action or omission of the Community56. Accordingly, if Barry can establish that the nature and effect of the breach is sufficiently serious thereby directly resulting in significant loss to him as in terms of his employment, this will strengthen the basis of a claim under Article 288. BIBLIOGRAPHY Craig & Burca (2007). EU Law: Text, Cases and Materials. 4th Edition Oxford University Press. Damian Chambers, Christos Hadjiemmanuil, Giorgio Monti & Adam Tomkins (2006). European Union Law. Cambridge University Press Trevor Hartley., (2004). European Law in a Global Context: Text Cases and Materials. Cambridge University Press. Norbert Reich., (2003). Understanding EU Law: Objectives, Principles and Methods of Community Law. Intersentia. Hanlon, J., (2003). European Community Law. 3rd Edition Sweet & Maxwell. Lasok, D., & Bridge, J.W (1994). Law and Institutions of the European Communities. Butterworths. Franz C. Mayer (2006). Supremacy –Lost WHI Paper 2/06 German Law Journal Vol 6 No 11 pp1497-1507. GF Mancini and T Keeling, (1991) From CILFIT to ERT: The Constitutional Challenge Facing the European Court”. Yearbook of European Law 1. Jo Shaw. (2000). Law of the European Union. 3rd Edition Palgrave Macmillan Steiner, Woods & Twigg-Flesner (2003). Textbook on EC Law. 8th Edition Oxford University Press. All Treaties available at www.eur-lex.europa.eu and www.eurotreaties.com Read More